New Dashboard: Tracking Recession Risk in Real Time

We have published a new dashboard designed to track and monitor recession risk in the United States and the euro area. The dashboard provides real-time estimates of recession risk alongside updated historical estimates based on Furno and Giannone (2024). Estimates are updated monthly as new data on economic sentiment and financial conditions become available.

The Main Idea

Recessions tend to occur when financial conditions tighten while economic activity weakens. Evaluating either signal in isolation can be misleading. By combining both indicators, this framework nowcasts recession risk in real time, improving the timeliness and accuracy of predictions.

Methodology Overview

The recession risk nowcast is based on a Bayesian logit model that integrates one macroeconomic indicator and one financial indicator for each region.

• United States: ISM PMI Manufacturing index + Composite Indicator of Systemic Stress (CISS)
• Euro area: Economic Sentiment Indicator (ESI) + CISS

Additional methodological details are available in Furno and Giannone (2024).

Additional information on the implementation and interpretation of the estimates can be found in the FAQ section of the dashboard:
🔗 https://recessionrisk.com/